Top 10 of 2005 - Issue #6: Remittances Reach New Heights

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Top 10 of 2005 - Issue #6: Remittances Reach New Heights

December 1, 2005

Top Ten

By Kirin Kalia

Domestic workers from the Philippines line up at a Philippine National Bank (PNB) remittance center in Hong Kong.

For centuries, immigrants have sent money home to help their families pay for basic needs and consumer goods as well as investments in education and small businesses. Since the late 1990s, international institutions and governments have paid more attention to remittance flows to developing countries in Latin America, Asia, and Africa, though data have often been hard to find and incomplete.

In 2005, research into the size of remittances and their role as a development tool reached a new peak. Among the concerns are high costs for remitting money, weak financial institutions, and antiquated lending and investment laws in developing countries.

A flurry of studies and data estimates have been published this year, including one from the World Bank in November that estimated that about $232 billion will be remitted through formal channels in 2005, more than 70 percent of which ($167 billion) will go to developing countries. The countries receiving the largest flows (in order) are India, China, Mexico, France, and the Philippines.

There is some consensus that remittances reduce poverty, but a vigorous debate continues on whether they promote development as robustly as they could. Development agencies, national governments, and foreign investors are now trying to figure out how to incorporate remittances into their planning and policies.